The underlying principle of market economy is the assumption that economic relationships are based on free competition. In terms of economics, competition may be defined as the race in which sellers in a market engage in order to acquire more customers, thereby increasing their sales of goods and services, and consequently, their profits. The concept of competition constitutes the basis for an efficiently operating market system; it not only protects the independency of the decisions of the market actors and the actions that serve private interests, but also ensures social justice and economic efficiency.
Additionally, competitive market structure has dynamic functions as well. Competition facilitates technological development. This is because technological development plays a key role in achieving the status favored by the undertakings. Besides, competitive market structure encourages firms to continually adopt their competitive strengths to market conditions.
On the other hand, government intervention is made unavoidable due to the fact that when markets are left to their own devices, there is a risk of undertakings in the market entering a destructive race or, instead of a race, into co-operations which negatively affect social welfare and economic development. At the same time, such actions will restrict the freedom of enterprise, consequently interrupting the fundamental democratic rights and freedoms. Prevention of the aforementioned problems will only be possible by supporting the economic system with a competition act and by establishing an efficient competition authority to enforce that act.
In this framework, competition authorities which have an obligation to enforce competition laws are charged with taking the necessary measures and implementing the necessary regulations in order to prevent practices and operations of undertakings which distort efficient competitive conditions, with a view to increase social welfare by safeguarding the freedom of enterprise and ensuring efficiency in resource allocation. As a matter of fact, Article 167 of the Constitution clearly charges the State with preventing monopolization and cartelization in the markets, which may arise de facto or as a result of agreements. As stated above, the State carried out this task assigned by the 1982 Constitution by adopting the Act no. 4054 on the Protection of Competition in 1994 and the establishment of the Competition Authority, which is charged with enforcing this Act, in 1997.
The main goal of the Competition Act is the prohibition of cartels and other restrictions on competition, prevention of abuse of dominant position by a firm which has dominance in a certain market and prevention of the creation of new monopolies by monitoring some merger and acquisition transactions.
The goal of the Competition Authority, which is charged with enforcing the aforementioned Act, is to facilitate and protect competition in markets. In order to achieve this goal, the Competition Authority
- penalizes undertakings which distort or prevent competition in the market, through examination and investigation processes subject to detailed regulation,
- grants exemption to and prepares secondary regulations for agreements which are in conflict with competition rules but are beneficial for the economy and the consumers,
- prevents monopolization within the market by examining mergers, acquisitions and joint-ventures over a certain threshold,
- in the privatization stage, examines the transfer of public undertakings to the private sector, and through privatization, reduces the effects of the state on the economy while preventing monopolization in the areas the public sector exits,
- ensures the dominance of competitive conditions within the markets by sending opinions on various acts and regulations which would negatively affect or restrict competition in the markets to government institutions and organizations concerned.
On summary, The Competition Authority was established as per Article 20 of the Act No. 4054, in order to ensure the formation and development of markets for goods and services in a free and sound competitive environment, to observe the implementation of this Act, and to fulfill the duties assigned to it by the Act. Within that framework, the main duty of the Competition Authority is to prevent any threats to the competitive process in the markets for goods and services through the use of the powers granted by law. Ensuring the fair allocation of resources and increasing social welfare by the protection of the competitive process constitutes the basic foundation of the mission of the Competition Authority.